Asia’s factories grind forward amid Lunar New Year disruptions

Asia’s factories grind forward amid Lunar New Year disruptions

Manufacturing engines across Asia ground ahead last month, with most continuing to expand during the volatile Lunar New Year holiday period.

Japan recorded its strongest reading since 2018, while Indonesia, Philippines and Vietnam all remained above the 50 level that separates expansion from contraction. Malaysia and Thailand shrank further, at 47.7 and 47.2.

Taiwan and South Korea, which have been seeing strong demand for electronics, are set to report PMIs Tuesday after a holiday. Separate data Monday showed South Korea’s exports rose for a fourth straight month, fuelled in part by demand for semiconductors.

China’s recovery slowed a bit last month as factories closed during the Lunar New Year holidays and mobility restrictions limited a typically busy travel period. Data released Sunday by the National Bureau of Statistics showed February’s PMI declined to 50.6 from 51.3 a month earlier, while the non-manufacturing gauge slipped to 51.4 from 52.4.

The latest purchasing managers index readings shed more light on how manufacturers are viewing the outlook beyond typical Lunar New Year disruptions, elevated shipping costs and a recent surge in prices for raw materials, including copper.

Vaccination drives and loosening of mobility restrictions are boosting some economies in the region, while others are challenged by fresh virus outbreaks that put pressure on policy makers to keep up stimulus.

In Japan, the Jibun Bank and IHS Markit index rose to 51.4, while new orders enjoyed their highest reading since October 2018. Manufacturers in the world’s third-biggest economy are upbeat that the better outlook will continue.

“Over a third of respondents estimated that production volumes would increase over the coming 12 months,” Usamah Bhatti, an economist at IHS Markit, said in a release accompanying the Japanese data.

In Myanmar, the IHS Markit PMI gauge fell to 27.7 -- its lowest reading since the data series began -- as factories closed after a Feb 1 coup d’etat by the military.

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